State Information Technology Agency
Corporate Strategy 2009/10 Presented by: Femke Pienaar – CEO (Acting)
2
Agenda
• Background
• Strategic Imperatives
• Budget 2009/10
OPERATIONALEFFICIENCY
FINANCIALSUSTAINABILITY
IMPROVEDSERVICES
CUSTOMER & STAKEHOLDERSATISFACTION
3
Background
• WHERE DID IT ALL START?
Presidential Review – 1998.
Merger in 1999 of Infoplan, Central Computer Services and SAPS’ IT/IS/IM Services.
• SITA’S OBJECTIVES are derived from the SITA Act.
Section 6 of the Act enjoins SITA to:-
Provide information technology;
Provide information systems;
Provide ICT related services in a maintained information systems security environment; and to
act as an agent of the South African Government.
4
Strategic Focus
• There is an urgent need to go “back to basics” - Provide Mandated Services.
• SITA must build operating capability that supports the ICT requirements of government.
• SITA must be seen to be contributing to improved service delivery.
5
Guiding Principles
Reduce CostsImprove Productivity
Citizen Convenience
Intro
du
ce HD
I’s in
to IC
T
En
sure in
terop
erability
of system
s
Imp
rove S
ystems
Secu
rity
En
sure eco
no
mies
of scale
Red
uce D
up
lication
Government IT Architecture
6
Organisational Structure
BOARD OFDIRECTORS
ChiefFinancial Officer
(acting)Mr A Pretorius
Chief:Regulatory Affairsand Procurement
Mr A P Pedlar
Chief ExecutiveOfficerVacant
Chief:Business
OperationsMs F Pienaar
Chief:Strategic Services
Mr M Mtimunye
Chief:Shared
ServicesMs R E Magoma-Nthite
ChiefInformation
OfficerMr E Khan
Company SecretaryMs E Strydom
Chief Internal AuditMs L Samuel
Audit and RiskCommittee
MINISTER OF PUBLIC SERVICE AND
ADMINISTRATION
7
Service Portfolio
SITA provides a broad spectrum of IT services, which are structured under the following categories:
•Client Services•Infrastructure Services•Hosting & Data Centre•Business Portfolio Management•Service Management Centre
•Professional Services•Procurement Services•Service Management Centre•Training; and •Research and Development
8
SITA Contribution to Government Programme of Action
• Providing ICT connectivity and remote support by leveraging off the next generation
network that SITA has built.
• Creation of an ICT Blueprint that governs the deployment of ICT’s to Thusong Centres,
• Deploying a shared services platform that will be used to support ICT’s deployed within
these communities.
• Establishing an Open Source Programme Office that will create an Open Source
Laboratory, and an implementation roadmap for Open Source deployment in Government.
• Contributing to the development of a catalytic next generation e-government prototype.
• Developing the framework for a new ERP system in government (IFMS)
• Developing a Government Wide Enterprise Architecture Framework.
• Developing a framework for adopting a Service Orientated Architecture within Government.
9
Client feedback highlight performance Challenges
• Lack of a fully executed IT Service Management Framework (ITSM)
• Poor quality and pricing of services;
• Overcharging on the mandatory components of its services (“monopoly”);
• Deficient or possibly non-existent Service Level Agreements (SLA’s) or absence of SLA management
processes;
• Capacity constraints (HR);
• Project management and continuity (projects which are started but then abandoned for various reasons)
• Possible business continuity issues.
• The lengthy procurement lifecycle
• Timely submission of correct and accurate invoices.
10
Strategic Imperatives
• Client Relationship Building
• Optimize Information Communication Technology (ICT) Infrastructure and Services
• Modernize Public Service Operations
• Develop Our People
• Achieve operational excellence
• Reduce costs
• Extend our service footprint;
• Improve financial sustainability
11
Develop a detailed Service Catalogue that clearly defines each of SITA’s service
offerings.
Increase utilisation to improve cost efficiency
Develop new value added offerings e.g VOIP, LAN & desktop support, DRP
Develop and implement Security Framework
Implement Green Strategy
Key Initiative : Strategic Imperative 1
“Optimize Information Communication Technology (ICT) Infrastructure and Services “
12
Optimise and automate departmental core processes
Digitise paper documents [Electronic Document and Records Management]
e-Payments - Improve payment processing, invoicing and administration to reduce
cash transactions
e-Government – enable electronic transactional capability for citizens
m-Government – provide and implement a government wide mobility strategy
Government Wide Collaboration
. IFMS
Key Initiative : Strategic Imperative 2
“Modernize Public Service“
13
Key Initiative : Strategic Imperative 3
“Develop our people “
Develop Integrated Talent Management Strategy
Focus on embedding our organisational values to ensure they are instilled
in the way we work
Develop leadership and employee interventions to enhance the
organisations capabilities
Determine and define a strategy for closing specific technical skills gap and
generic management and leadership skills
Improve and professionalize the existing management processes and
governance
14
Key Initiative : Strategic Imperative 4
“Achieve Operational Excellence “
Implement an IT Service Management framework
Implement an enterprise and operational governance structure for IT
Develop and implement planning and business processes to deliver clear and
transparent mechanisms for tracking progress and performance against strategic
objectives
15
Create a shared services model to centralise, standardise and consolidate the
delivery of all service offerings.
Adopt a standard operating environment that can aid in lowering the total cost of
ownership.
Develop and Implement an IT Asset management strategy
Define and implement a Voice over IP (VOIP) strategy
Develop options to minimise duplication by consolidating and standardising non-
core business infrastructure and applications (Including hardware, software, third-
party contracts including WAN links)
Key Initiative : Strategic Imperative 5
“Reduce Cost “
16
License Management – Implement Procurement specific interventions that are specified below:
•Improve processes that improve the turnaround times for procurement•Electronic portal for the purchase of ICT commodities.•Simplify the bidding process by the use of templates.•Enter into single/multi/ year government wide contracts with major software suppliers and
single enterprise licenses for vendors that dominate the space.•Extend hardware and software procurement models to incorporate mass storage,
backup, telecommunications and other IT devices and peripherals.•Entrench software and hardware renewal as a government wide initiative as opposed to
a departmental function.•Establish a streamlined procurement process and use volume purchasing and site
licenses to establish attractive prices on standardised hardware and software.•Develop cost effective and flexible procurement practices such as Strategic Sourcing;
Performance based contracts that will allow government to obtain greater value for its ICT
expenditure.
Key Initiative : Strategic Imperative 5 - continued
“Reduce Cost “
17
Key Initiative : Strategic Imperative 6
“Extend Our Service Footprint “
Develop and implement strategies to extend service offerings to existing
customersDevelop and implement a strategy to extend the existing SITA offerings to local
government, using the shared services model
18
Key Initiative : Strategic Imperative 7
“Improve Financial Sustainability “
Develop and maintain long term funding strategies.Develop and maintain effective working capital management strategies.Develop and implement an integrated, consistent and robust planning cycle
regime.Map services regarding Revenue/Market Share/ProfitabilityDevelop, Implement and Maintain competitive costing and sustainable pricing
strategies (commercial models).Develop strategies to protect existing revenue streamsAsset Management
19
Key Initiative : Strategic Imperative 8
“Build Client Relationships“
Develop and implement a service portfolio databaseImplement CRM
20
Budget 2009/10
• Revenue: R4,365 billion
• Gross Margin: 20%
• Surplus after tax: R209,2 million
• Debtors days: 65
• Manage creditor days: 65
• Capital expenditure: R 516,3m
• Operating expenditure: 16.5% of Revenue
21
Budget 2009/10
2009/10BUDGET
R' 000
Gross Revenue 4,365,212
Less: Cost of sales 3,492,169
Gross Surplus 873,042
Operating Expenses 720,260
Operating Surplus 152,782
Other Income 137,743
Surplus before tax 290,525
Tax 81,347
Net Surplus/ (loss) 209,178
Assumptions
Gross surplus as a percentage of revenue 20.0%Operating Expenditure as a % of Revenue 16.5%Surplus Before Tax 6.0%Revenue Growth 10.0%
22
Budget 2009/10 – Statement of Financial Position
STATEMENT OF FINANCIAL POSITION 2009/10BUDGET
R' 000
ASSETS
Cash and cash equivalents 645,328
Trade and other receivables 725,569
Property, plant & equipment 1,368,057
Other 74,181
TOTAL ASSETS 2,813,135
LIABILITIES
Trade and other payables 622,117
Interest bearing borrowings 10,400
Provisions 41,745
Income received in advance 250,000
Current tax liability 81,347
Post-retirement medical liability 85,000
TOTAL LIABILITY 1,090,609
TOTAL NET ASSETS 1,722,527
TOTAL LIABILITIES AND ASSETS 2,813,135
23
Budget 2009/10 – Cashflow Statement
CASH FLOW STATEMENT
2009/10BUDGET
R' 000
Cash from operating activities 394,464
Cash flows from investing activities (516,293)
Cash flow from financing activities (5,200)
Increase/(decrease) in cash and cash equivalents (127,029)
Cash and cash equivalents beginning of year 772,358
Cash and cash equivalents end of year 645,328
24
Budget 2009/10
2004/05ACTUAL
2005/06ACTUAL
2006/07ACTUAL
2007/08 ACTUAL
2008/09BUDGET
2009/10BUDGET
2010/11BUDGET
R' 000 R' 000 R' 000 R' 000 R' 000 R' 000 R' 000
Gross Revenue 2,636,757 2,946,185 3,356,615 3,607,613 3,968,374 4,365,212 4,801,733
Less: Cost of sales 2,140,601 2,382,589 2,644,743 2,690,289 3,174,699 3,492,169 3,841,386
Gross Surplus 496,156 563,596 711,872 917,324 793,675 873,042 960,347
Operating Expenses 410,802 488,347 579,724 607,441 694,466 720,260 768,277
Operating Surplus 85,354 75,249 132,148 309,883 99,209 152,782 192,069
Other Income 15,531 39,511 71,991 118,092 127,539 137,743 148,762
Surplus before tax 100,885 114,760 204,139 427,975 226,749 290,525 340,831
Tax 31,630 33,429 60,645 128,774 79,362 81,347 95,433
Net Surplus/ (loss) 69,255 81,331 143,494 299,201 147,387 209,178 245,398
Assumptions
Gross surplus as a percentage of revenue 18.8% 19.1% 21.2% 25.4% 20.0% 20.0% 20.0%Operating Expenditure as a % of Revenue 15.6% 16.6% 17.3% 16.8% 17.5% 16.5% 16.0%Surplus Before Tax 3.8% 3.9% 6.1% 11.9% 6.0% 6.0% 6.0%Revenue Growth 14.50% 11.7% 12.0% 7.5% 10.0% 10.0% 10.0%
25
Budget 2009/10 continued
STATEMENT OF FINANCIAL POSITION 2004/05ACTUAL
2005/06ACTUAL
2006/07ACTUAL
2007/08 ACTUAL
2008/09BUDGET
2009/10BUDGET
2010/11BUDGET
R' 000 R' 000 R' 000 R' 000 R' 000 R' 000 R' 000
ASSETS
Cash and cash equivalents 664,892 1,085,064 1,096,728 1,101,257 772,358 645,328 512,016
Trade and other receivables 664,784 556,251 664,972 801,626 713,697 725,569 798,326
Property, plant & equipment 535,279 477,129 474,619 594,133 1,066,669 1,368,057 1,676,378
Other 59,171 108,472 109,137 63,550 73,437 74,181 75,099
TOTAL ASSETS 1,924,126 2,226,916 2,345,456 2,560,566 2,626,161 2,813,135 3,061,819
LIABILITIES
Trade and other payables 560,167 581,601 697,412 656,213 647,052 622,117 610,259
Interest bearing borrowings 36,400 31,200 26,000 20,800 15,600 10,400 5,200
Provisions 58,645 54,000 60,000 73,500 38,298 41,745 45,502
Income received in advance 346,521 536,541 352,327 276,637 250,000 250,000 250,000
Current tax liability 10,693 22,109 57,414 74,241 79,362 81,347 95,433
Post-retirement medical liability 69,765 78,196 85,540 93,213 82,500 85,000 87,500
TOTAL LIABILITY 1,082,191 1,303,647 1,278,693 1,194,604 1,112,812 1,090,609 1,093,894
TOTAL NET ASSETS 841,935 923,269 1,066,763 1,365,962 1,513,349 1,722,527 1,967,925
TOTAL LIABILITIES AND ASSETS 1,924,126 2,226,916 2,345,456 2,560,566 2,626,161 2,813,135 3,061,819
26
Budget 2009/10 continued
CASH FLOW STATEMENT
2004/05ACTUAL
2005/06ACTUAL
2006/07ACTUAL
2007/08 ACTUAL
2008/09BUDGET
2009/10BUDGET
2010/11BUDGET
R' 000 R' 000 R' 000 R' 000 R' 000 R' 000 R' 000
Cash from operating activities 342,261 508,932 165,588 271,171 163,370 394,464 419,159
Cash flows from investing activities (123,172) (83,560) (148,724) (261,442) (487,069) (516,293) (547,271)
Cash flow from financing activities (5,200) (5,200) (5,200) (5,200) (5,200) (5,200) (5,200)
Increase/(decrease) in cash and cash equivalents 213,889 420,172 11,664 4,529 (328,899) (127,029) (133,312)
Cash and cash equivalents beginning of year 451,003 664,892 1,085,064 1,096,728 1,101,257 772,358 645,328
Cash and cash equivalents end of year 664,892 1,085,064 1,096,728 1,101,257 772,358 645,328 512,016
Question & Answer session
Thank you